Field of the Invention
The present invention relates generally to systems for detecting points of compromise of accounts to identify fraudulent transactions, and more specifically, to a system and method for detecting merchant points of compromise using network analysis and modeling.
Related Art
It is estimated that credit card compromise fraud loss is over two billion dollars per year in the United States. Issuers, acquirers, and/or network associations have tried numerous ways to identify and detect credit card compromise fraud loss early. Conventionally, a group of rules for the authorization of transactions are applied in order to generate corresponding alerts. In some of the conventional approaches to credit card compromise detection, the relationship between different fraud transactions can be analyzed.
Recently, there has much research using network analysis in the field of fraud detection, such as anti-money laundering activities or assets and auto insurance fraud detection. This network analysis approach has had some success in identifying “hidden” relationships between different items in the fraud network. While network analysis has shown to be a promising tool in early identification and detection of fraud in some environments, there remains a need to further develop more robust and efficient approaches to detecting merchant points of compromise.